UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of October, 2011
Commission File Number: 000-52132
CHINA OUMEI REAL ESTATE
INC.
(Exact name of registrant as specified in its charter)
Floor 28, Block C
Longhai Mingzhu Building
No.182 Haier Road, Qingdao 266000
Peoples Republic of
China
(86) 532 8099 7969
(Address of principal executive
offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Not Applicable
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Not Applicable
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If Yes marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82 - ______.
On October 5, 2011, China Oumei Real Estate Inc. (the Company) issued a press release announcing its financial results for the fiscal quarter ended June 25, 2011. A copy of the press release is furnished as Exhibit 99.1 hereto.
The press release furnished as Exhibit 99.1 hereto contain certain statements that may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, are forward-looking statements, including statements regarding the Companys business strategy, plans and objectives and statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as should, believes, expects, anticipates or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of their respective dates. The Companys actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Companys periodic reports and registration statements that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Exhibits
Exhibit | Description |
99.1 | Press release regarding financial results, dated October 5, 2011 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHINA OUMEI REAL ESTATE INC. | |
By: /s/ Weiqing Zhang | |
Weiqing Zhang | |
Chief Executive Officer |
Date: October 6, 2011
EXHIBIT INDEX
Exhibit | Description |
99.1 | Press release regarding financial results, dated October 5, 2011 |
Exhibit 99.1
FOR IMMEDIATE RELEASE
China Oumei Real Estate Inc. Reports Second Quarter 2011 Results
QINGDAO, China October 5, 2011 /PRNewswire-FirstCall/ China Oumei Real Estate Inc. (China Oumei, or the Company), a leading housing and real estate development company headquartered in Qingdao, Shandong Province, China, today reported its financial results for the second quarter ended June 25, 2011.
Second Quarter 2011 Highlights
Total sales decreased 45.8% to $15.3 million in the second quarter of 2011 from $28.2 million in the second quarter of 2010.
Gross profit decreased 31.2% to $6.4 million from $9.3 million in the second quarter of 2010.
Gross margin increased to 41.8% from 33.0% in the second quarter of 2010.
Operating income decreased 19.7% to $5.1 million from $6.3 million in the second quarter of 2010.
Net income decreased 15.0% to $3.3 million from $3.9 million in the second quarter of 2010.
Diluted net income per share decreased to $0.10 from $0.12 in the second quarter of 2010.
Mr. Weiqing Zhang, Chief Executive Officer of China Oumei, said, The second quarter continued to be challenging to us and many other developers nationwide, due to the recent mortgage and purchase restrictions imposed by the government. The governments stated goal was to curb high-flying property prices and speculation activities in cities where property bubbles are clearly developing; however, the broad-brush control measures taken by the government even in second and third tier cities in our markets, where per-capita GDP and income growths have outpaced increases in property prices, inadvertently imposed a great deal of constraint on our potential customers. In many cases, our apartment and office customers cannot obtain mortgage financing from banks, most of which are state-owned and have their hands tied by these recent policies. In addition, sentiment of potential buyers has also suffered they have become increasingly cautious and decided to remain on the sidelines to see whether there will be additional restrictive policies that might impact their ability to purchase a home, as well as to see whether prices would decline further in the near future.
Chinas evolution towards a true free-market economy is irreversible, and thats why we do not believe these administrative means to arbitrarily control the market will last in the long term. We are confident that buyers will return to the market as they did in the past cycles with other rounds of government policies, and we believe in our strategy to offer affordable, bread-and-butter type of housing to middle-income buyers in second and third tier cities in one of the fastest growing markets and economic regions of the country, which makes our products much less of a target for real estate speculation than in major first tier cities. In addition, we have a very healthy balance sheet and continue to actively seek new development opportunities in the markets that we know best. For example, we are in advanced discussions with the government of a satellite city of Qingdao in an effort to obtain the land use and development right for a major urban redevelopment project supported by the government, which will significantly boost our growth prospects for the next decade and beyond.”
Fiscal Second Quarter 2011 Results
Total sales for the quarter ended June 25, 2011 were $15.3 million compared with $28.2 million for the same period of 2010, a decrease of 45.8% . The decline was mainly attributable to a slowdown in sales at the Dongli Garden Phase 1 and Longhai Mingzhu projects. The Dongli Garden Phase 1 project contributed $8.0 million in sales, or 28.5% of total sales, in the three months ended June 25, 2010, but only $1.6 million in sales in the same period in 2011. For this project, the fourth quarter of 2009 and first half of 2010 were the peak season of the government-sponsored villagers (residents who were the prior holders of the land use rights) relocation process, which has tapered off since the second half of 2010. The Longhai Mingzhu project contributed $9.8 million in sales, or 34.7% of total sales, in the three months ended June 25, 2010, but only $4.0 million in sales in the same period in 2011. Meanwhile, in the three months ended June 25, 2011, our new project Jiangshan Dijing has not met all the revenue recognition criteria. Sales were also negatively impacted by additional restrictive government policies issued in the first quarter to curb housing prices and speculation, as mortgage financing became more difficult and buyers became increasingly cautious due to new government tightening measures.
Gross profit for the second quarter of 2011 was $6.4 million compared with $9.3 million for the same period in 2010, a decrease of 31.2% . Gross margin was 41.8% compared with 33.0% for the same period last year. The decrease in the gross profit was due to the decrease in total sales as noted above, offset by an improved gross profit margin. The improvement in gross profit margin is mainly attributable to the fact that the Dongli Garden Phase 1 project, which had a low gross profit margin because of villager relocation efforts, contributed approximately 28.5% of total sales in the three months ended June 25, 2010, compared with only 10.1% in the same period of 2011. Dongli Garden was a joint effort between us and local government agencies, and Phase 1 of the project mainly involved relocating villagers previously residing on the parcel designated for Phase 2. Therefore, as part of the government’s urban modernization initiatives, the government strictly regulated the selling prices of all Phase 1 units, which were on average considerably below would-be market prices and in turn resulted in a lower profit margin. Meanwhile, we were required by the government to offer pricing concessions to relocated former villagers based on the sizes of parcels they previously resided on. On the other hand, the Longhai Mingzhu project, whose sales represented 25.9% of total sales in the three months ended June 25, 2011, had a gross margin of 61.6% due to higher average selling prices than in the same period of 2010, when Longhai Mingzhu had a gross margin of 56.8% and contributed approximately 34.7% of total sales.
Total operating expenses for the second quarter of 2011 were $1.3 million, or 8.8% of sales, compared with $3.0 million, or 10.6% of sales, for the same period last year. Such decrease was mainly due to the reduction in general and administrative expenses, which decreased 55.9% to $1.3 million in the three months ended June 25, 2011 from $2.9 million in the same period in 2010. We had greater general and administrative expenses in the 2010 period as a result of the April 14, 2010 reverse acquisition and private placement transactions.
Operating income for the quarter ended June 25, 2011 was $5.1 million, or 33.0% of sales, compared with $6.3million, or 22.3% of sales, for the same period last year, a decrease of 19.7% . The decrease in operating income was due to lower total sales as noted above.
Net income and net income applicable to common shareholders for the second quarter of 2011 was $3.3 million, or $0.10 per diluted share, a decrease of 15.0% from $3.9 million, or $0.12 per diluted share, for the same period last year.
Financial Condition
As of June 25, 2011, the Company had cash and cash equivalents of $39.9 million, compared with $33.6 million as of December 25, 2010. Working capital as of June 25, 2011 was $115.2 million compared with $102.6 million at the end of FY 2010. Shareholders’ equity was $153.8 million, compared with $144.6 million at the end of FY 2010.
Business Outlook
For FY 2011, the Company intends to focus on sales for projects that have recently been completed, or for which construction will be completed in 2011 and 2012, including primarily the Weihai International Plaza, Qilu Textile Center (Residential), Dongli Garden 1, Oumei Complex 2, Longhai Mingzhu, and Xingfu Renjia 2 projects. In addition, pre-sale in our Jiangshan Dijing project (also known as “Chongqing Garden”) is scheduled to commence in the second half of 2011.
The Company also intends to continue its penetration into the high-end real estate market, which is expected to generate high returns within the next few years. Two projects in planning in this category are expected to start construction in FY2012, including a large community of resort homes on the beach in Weihai (the Weihai Beach Resort project) and a luxury beachfront resort hotel that will be located just across the street from the Stone Old Man beach in Qingdao (the Longhai Hotel project).
The Company is actively pursuing several development opportunities, including a high-rise commercial/office project in the new CBD zone of the Laoshan District in Qingdao and a large-scale government-promoted urban redevelopment project in a satellite city of Qingdao. These projects will be key drivers to our future growth. The Company expects to announce related details in the near future.
China Oumei filed its annual report on Form 20-F for the fiscal year ended December 25, 2010 with the Securities and Exchange Commission on June 20, 2011.
About China Oumei Real Estate Inc.
China Oumei is one of the leading real estate development companies in Qingdao, Shandong Province, China. The Company develops and sells residential and commercial properties, focused on middle and upper income customers in the coastal region of the Shandong peninsula in northeastern China, including the cities of Qingdao, Weihai, and Yantai and inland locations that include Weifang.
China Oumei has six projects currently under construction with a total gross floor area of 488,299 square meters. Since its operations began in 2001, China Oumei has completed 18 projects with a total gross floor area of 1,513,898 square meters, of which approximately 95% have been sold.
China Oumei’s mission is to provide high-quality, comfortable, and convenient living and working space to middle and upper income customers, while also earning for its shareholders an internal rate of return that exceeds its cost of capital. For more information, please visit http://www.chinaoumeirealestate.com.
Safe Harbor Statement
Certain of the statements made in this news release are “forward-looking statements” within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties, and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership, or achievements of the Company to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “could,” “intend,” “target” and other similar words and expressions of the future.
Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
China Oumei Real Estate Inc.
Mr. Yu Fei (Chinese and English)
Telephone +86 532 8099 7968 in Qingdao
Mobile +86 186 0532 0209 in Qingdao
Christensen
Mr. Yuanyuan Chen (Chinese and English)
Telephone +86 10 5971 2001 in Beijing
Mobile +86 139 2337 7882 in Beijing
ychen@christensenir.com
Mr. Tom Myers (English)
Mobile +86 139 1141 3520 in Beijing
tmyers@christensenir.com
Ms. Kathy Li (Chinese and English)
Telephone +1 212 618 1978 in New York
kli@christensenir.com
Source: China Oumei Real Estate Inc.
www.ChinaOumeiRealEstate.com
Financial tables to follow.
CHINA OUMEI REAL ESTATE INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
JUNE 25, | ||||||
2011 | December 25, | |||||
(Unaudited) | 2010 | |||||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash | $ | 39,948,665 | $ | 33,590,417 | ||
Restricted cash | 2,251,468 | 2,285,490 | ||||
Revenue in excess of billings, net | 24,600,281 | 19,458,718 | ||||
Contracts receivable, net | 31,889,811 | 38,615,085 | ||||
Related party receivable | - | 1,159,577 | ||||
Inventories | 74,544,305 | 70,410,310 | ||||
Prepayment | 14,739,923 | - | ||||
Other receivables, net | 24,251,148 | 25,867,452 | ||||
Prepaid expenses | 3,602,582 | 2,969,452 | ||||
Total Current Assets | 215,828,183 | 194,356,501 | ||||
PROPERTY, PLANT AND EQUIPMENT, NET | 4,583,587 | 4,283,108 | ||||
PROPERTY, PLANT AND EQUIPMENT, IDLE | - | 1,808,401 | ||||
GOODWILL | 3,815,515 | 3,716,859 | ||||
LAND USE RIGHTS, NET | 55,806,408 | 54,973,721 |
DEFERRED TAX ASSETS | 1,234,489 | 981,669 | ||||
TOTAL ASSETS | $ | 281,268,182 | $ | 260,120,259 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
CURRENT LIABILITIES | ||||||
Current portion of long-term debt | $ | 34,460,042 | $ | 35,414,500 | ||
Short term loans | 1,444,517 | 1,417,264 | ||||
Accounts payable | 10,455,849 | 1,810,919 | ||||
Related party payable | 36,011 | - | ||||
Customer deposits | 19,833,606 | 21,149,526 | ||||
Other payables | 2,163,637 | 875,866 | ||||
Taxes payable | 31,831,042 | 30,971,901 | ||||
Other current liabilities | 451,299 | 135,442 | ||||
Total Current Liabilities | 100,676,003 | 91,775,418 | ||||
LONG TERM DEFERRED TAX LIABILITIES | 26,830,302 | 23,703,855 | ||||
COMMITMENTS AND CONTINGENCIES | ||||||
SHAREHOLDERS' EQUITY | ||||||
Preference stock, par value $0.002112 per share, 20,000,000 shares authorized, 2,774,700 shares issued and outstanding | 5,860 | 5,860 | ||||
Common stock, par value $0.002112 per share, 100,000,000 shares authorized, 31,020,062 shares issued and outstanding | 65,514 | 65,514 | ||||
Additional paid in capital | 17,641,864 | 17,641,864 | ||||
Warrants outstanding | 3,177,032 | 3,177,032 | ||||
Appropriated retained earnings | 18,721,749 | 17,370,972 | ||||
Unappropriated retained earnings | 99,777,149 | 95,871,921 | ||||
Accumulated other comprehensive income | 14,372,709 | 10,507,823 | ||||
Total Shareholders' Equity | 153,761,877 | 144,640,986 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 281,268,182 | $ | 260,120,259 |
CHINA OUMEI REAL ESTATE INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three Months ended June 25 | Six Months ended June 25 | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
SALES | $ | 15,308,528 | $ | 28,241,343 | $ | 31,012,048 | $ | 56,461,539 | ||||
COST OF SALES | (8,903,570 | ) | (18,935,451 | ) | (18,239,846 | ) | (4,0146,847 | ) | ||||
GROSS PROFIT | 6,404,958 | 9,305,892 | 12,772,202 | 16,314,692 | ||||||||
ADVERTISING | (11,935 | ) | (61,678 | ) | (56,130 | ) | (149,909 | ) | ||||
COMMISSION | (60,978 | ) | - | (75,685 | ) | - | ||||||
SELLING EXPENSES | (26,754 | ) | (12,879 | ) | (39,778 | ) | (31,280 | ) | ||||
BAD DEBT (EXPENSE) RECOVERY | 49,371 | 11,221 | (729,762 | ) | 180,833 | |||||||
GENERAL AND ADMINISTRATIVE EXPENSES | (1,295,376 | ) | (2,938,282 | ) | (2,906,924 | ) | (3,779,215 | ) | ||||
INCOME FROM OPERATIONS | 5,059,286 | 6,304,274 | 8,963,923 | 12,535,121 | ||||||||
OTHER INCOME (EXPENSES) | ||||||||||||
Miscellaneous income (expenses) | (309,388 | ) | 195,401 | (363,635 | ) | 181,224 | ||||||
Interest income(expense) | 5,166 | (79,145 | ) | (22,990 | ) | (234,529 | ) | |||||
(304,222 | ) | 116,256 | (386,625 | ) | (53,305 | ) | ||||||
INCOME BEFORE INCOME TAXES | 4,755,064 | 6,420,530 | 8,577,298 | 12,481,816 | ||||||||
INCOME TAXES | ||||||||||||
Current | (350,547 | ) | (205,394 | ) | (599,539 | ) | (401,156 | ) | ||||
Deferred | (1,059,564 | ) | (2,278,301 | ) | (2,245,569 | ) | (4,035,342 | ) | ||||
(1,410,111 | ) | (2,483,695 | ) | (2,845,108 | ) | (4,436,498 | ) | |||||
NET INCOME | 3,344,953 | 3,936,835 | 5,732,190 | 8,045,318 | ||||||||
OTHER COMPREHENSIVE INCOME: | ||||||||||||
FOREIGN CURRENCY TRANSLATION ADJUSTMENT | 1,963,603 | 59,033 | 3,864,883 | (9,925 | ) | |||||||
COMPREHENSIVE INCOME | $ | 5,308,556 | $ | 3,995,868 | $ | 9,597,073 | $ | 8,035,393 | ||||
NET INCOME | 3,344,953 | 3,936,835 | 5,732,190 | 8,045,318 | ||||||||
PREFERENCE STOCK DIVIDENDS | - | - | (476,184 | ) | - | |||||||
NET EARNINGS APPLICABLE TO COMMON SHAREHOLDERS | $ | 3,344,953 | $ | 3,936,835 | $ | 5,256,006 | $ | 8,045,318 | ||||
EARNINGS PER COMMON SHARE BASIC | $ | 0.11 | $ | 0.13 | $ | 0.18 | $ | 0.26 | ||||
EARNINGS PER COMMON SHARE DILUTED | $ | 0.10 | $ | 0.12 | $ | 0.17 | $ | 0.25 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING BASIC | 31,020,062 | 30,842,073 | 31,020,062 | 30,541,903 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING DILUTED | 33,794,762 | 33,043,737 | 33,794,762 | 31,654,832 |